Social security provides benefits to you when you retire. These benefits supplement your other retirement income sources. Social security benefits are determined, in part, by whether you are still working. Additionally, the amount of money you make from other retirement savings might affect how much you make from social security.
Go to the Social Security Administration's online resource (see Resources). Click on the red box on the right hand side of the screen which is titled "Estimate Your Retirement Benefits." This takes you to the next screen. Read the entire page. You must click on the box next to or below the privacy statement, acknowledging that you accept the terms and conditions for this site. Then, click "I agree" at the bottom of the page. Enter all of your personal information into the fields on the next page. Continue to the next page and enter your income amount in the box at the bottom of the page. Click "create estimate" and the calculator will estimate your monthly Social Security Benefits for you. The calculator will show you benefits for early retirement, full retirement and delayed retirement.
Your retirement benefits from social security are meant to supplement other retirement savings. Relying on social security alone may not provide you with enough money to live on. You should ideally have a pension and personal savings. However, your employer may not provide a pension to you. If this is the case, you'll need to increase your personal savings to match what you would have received from a pension.
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Working in retirement may reduce your retirement benefits. Additionally, if one half of your social security income plus your other income in retirement exceeds a certain threshold, then your social security benefits will be taxable at ordinary income tax rates. If you file single, this threshold is $25,000. Making more than this subjects 50 percent of your benefits to income tax. Making more than $34,000 annually subjects 85 percent of your benefits to tax. If you're married, then the threshold is $32,000 and $44,000, respectively.
You may avoid taxation of your benefits if you are earning money from a Roth IRA or from cash value life insurance policy loans. These are the exceptions to the rule that all income is used to determine whether your social security benefits are taxable. Consider using these as a foundation of your retirement plan if you want to avoid income tax on your benefits. Additionally, consider only working in retirement if you have to, since working may reduce your benefits dramatically if you end up making too much money.